The Nigerian economy has been seriously affected by the COVID-19 pandemic, a crisis that has caused hardship around the world.
Oil prices have fallen and many nations are facing recession or even depression. For Nigeria that relies heavily on oil revenue, it is a dire situation.
As the government searches for alternative sources of revenue, experts say the agricultural sector remains a promising area.
Victor Ebong, an associate professor of Agribusiness and Development Economics at the University of Uyo, spoke to PREMIUM TIMES and supported this argument.
He discussed the government’s recent monetary and fiscal policies, and how the country can quickly take advantage of the agriculture sector to help the economy and ensure food sufficiency in the country. Excerpts:
PT: With the economy badly hit as a result of the coronavirus, the CBN and the government have rolled out many initiatives to help the economy. What’s your view of these monetary and fiscal policies?
Ebong: It is very true that economic activities the world over, including Nigeria, have been grossly affected by the outbreak of the coronavirus pandemic. Oil prices have fallen, the financial market is on the downside, aviation industry and even sports have suffered. I am also aware of the government’s monetary and fiscal intervention measures currently adopted to cushion the effects of COVID -19 menace.
The CBN reduced the interest rate on all existing intervention facilities from 9% to 5% for one year. It extended moratorium period on existing intervention facilities, created targeted N50 billion credit facilities for households and micro, small and medium enterprise size that are affected by COVID 19. The bank also opened its intervention facilities loan for pharmaceutical companies intending to expand or establish their own drug manufacturing plants in Nigeria as well as to hospitals and healthcare practitioners who intends to expand or build their facilities.
The federal government also, in provided an initial intervention of N15 billion to support the national response to contain and control the spread of this COVID-19 virus. In addition to this, the petrol pump price has been reduced from N145/liter to N125/liter to cushion the effect of rising prices of essential & food commodities.
These measures are very good in a way but it will have a short run positive impact on the economy. However, in the long run, there will be an onset of recession in the business cycle. A wave of pessimism and uncertainty will spread in business and those markets that before now were sellers’ markets will become buyers’ markets, leading to a fall in the production, investment, employment, and a rise in the general price levels except the trend is reversed on time.
PT: Considering the impact on oil, one would think that one sector that can quickly build the GDP would be agriculture. Do you agree?
Ebong: With the fallen prices of oil in the world market, I am very optimistic that the only option left for Nigerian is to diversify or go back to agriculture which had long been the mainstay of our economy before the oil boom as a way out of our economic woes and to boost our almost falling GDP.
PT: Clearly, this is an emergency situation now. How best can the government turn the agric sector around to make rapid returns that could significantly help the economy?
Ebong: As much as I know, nothing is impossible to do if we are really determined to do it. I can quite recall that in 2018 the prices of foodstuff drastically declined because we were all determined to go back to the farm rather the relying on the market because of a hard time we all faced in 2017. Again, with the government ban on importation of rice and grants/subsidies on domestic rice production in 2019, there was an increase in output of domestically produced rice and reduction in sell price quite below the imported rice.
With these experiences, the Nigerian government can adopt the following measures to rapidly turn the agricultural sector into a viable and potent sector to enhance economic growth and increase in our GDP:
· Increasing budgetary allocation to agricultural sector by 30% of its current allocation.
· Reduction of interest rate on investment in the agricultural production, and extension of moratorium period on existing intervention facilities.
· Strengthening the institutional framework for rural agricultural development including researches on improved inputs and technologies.
· Improved maintenance and provision of rural infrastructures to minimize post-harvest losses and enhance product evacuation.
· Reforms in input procurement and timely distribution to reduce dependence on import and ensure price stability, among others.
PT: If there is proper funding in the agric sector by the federal government, how will the nation benefit in tangible terms?
Ebong: Funding for the agricultural sector by the federal government is an investment in the sector in which there must be adequate returns above investment funds, with the attendant improvement in the well-being of the various stakeholders in the agricultural implementation process.
The federal government will stand to benefit in the following areas:
· The expected increase in food production and supply for the teeming Nigerian population will be achieved leading to food security in the country.
· Contribution of the agricultural sector as one of the key sectors to the GDP of the domestic economy will be greatly enhanced.
· Provision of industrial raw material for investment purposes by agro-allied enterprises.
· The Agricultural sector will continue to remain the single and most important employer of labour in the country.
· Foreign Exchange earnings will be enhanced through agric products exports in international trading.
· Provision of a market for industrial products mainly for agric production leading to the growth and development of such industries.
· As a rural oriented enterprise, funding of the agricultural sector is key to improving rural infrastructure that will make life comfortable for rural dwellers.